March's dead-cat-bounce in Chicago PMI (like January's) has died again as the business barometer drops to just 50.4 (from 53.6) missing expectations of 52.6. This barely-above-contractionary level was driven by an 11-point collapse in Order backlogs to the lowest since Dec 2015, and as MNI reports, "order patterns continued to be plagued by a lack of large orders and absence of international demand, purchasers said."
Barely above contraction, Chicago PMI's bounce is over…
Breakdown:
- Prices Paid rose compared to last month
- New Orders fell compared to last month
- Employment fell compared to last month
- Inventory rose compared to last month
- Supplier Deliveries rose compared to last month
- Production rose compared to last month
- Order Backlogs fell compared to last month
- Number of Components Rising: 4
As MNI reports,
Order patterns continued to be plagued by a lack of large orders and absence of international demand, purchasers said. Softer ordering led to a decrease in the Employment component, which fell back into contraction, where it has been in 10 of the last 12 months.
Despite lower ordering and employment levels, Production posted a small increase as special projects, and a plethora of low volume high margin orders kept companies busy.
The most surprising element of the report was an unusually large 20.2% surge in Supplier Deliveries to the longest since October 2014. Purchasers feared extensions in lead times could be telegraphing the beginning signs of major supply chain disruptions on the horizon.
Insufficient inventories of components at the supplier level were cited for lengthening in lead times, purchasers said. To a lesser extent some minor global strikes and transportation issues added to longer lead times aswell.
What was uniform was a lengthening in Supplier Lead times with many citing capacity issues at offshore facilities. This led to some inventory builds, purchasers said.
Outside of the barometer components, Prices Paid was up over 25% to the highest in 17-months and its first expansionary read in 9 months as commodities moved higher in April. Inventories added 5.6 points to 49.6, the highest since October as some companies noted difficulty in restocking from offshore suppliers.
Comments from the survey panel remained mixed with strong players continuing on a solid footing while others barely broke even. Others remained very weak and needed "way more orders".
Those on a solid footing reported higher backlogs and higher revenues.
Others were slow and continued to note a lack of larger orders, and an ongoing focus on grabbing market share on low volume, high margin orders. The latter may have boosted production levels along with seasonal factors.
via http://ift.tt/1pOvHgt Tyler Durden